Wednesday March 2 2018 Daily News Digest

Alibaba and Tencent investments

News Comments Today’s main news: Vanguard partners with Raisin. Rumor alert: Upstart seeking $100M from investors. LendInvest changes commercial property products. Apple may be blocking Chinese P2P lenders from app updates. Today’s main analysis: PeerIQ’s MPL earnings insights report. (A MUST-READ) Today’s thought-provoking articles: Fintech holds promise to expand credit. How the PE lifecycle can be audited by the blockchain. How […]

Alibaba and Tencent investments

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United Kingdom

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International

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Asia

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News Summary

United States

Online lender Upstart is said to seek $ 100 million from investors (American Banker), Rated: AAA

Upstart, which was founded by Google veterans, is testing venture capitalists’ appetite for an investment round of about $100 million, said two people briefed on the matter.

The San Carlos, Calif.-based startup is looking to sell shares that would value the business at $500 million to $1 billion, said one of the people, who asked not to be identified because the discussions were private. This venture capitalist didn’t pursue a deal because of an existing competitive investment.

PeerIQ’s Marketplace Lending Earnings Insights (PeerIQ Email), Rated: AAA

    • Where are we in the credit cycle? Earnings calls indicate CEOs/CFOs are constructive on the health of the US consumer and see a tax reform as improving consumers’ disposable income. However, an increasing supply for credit and demand for credit, as well as re-normalization trends and increased competition are leading to higher charge-offs.
Source: PeerIQ
  • Credit re-normalization continues across all major lending groups. Credit performance this quarter is mixed. We observe improvements, and record low delinquencies from ONDK, OMF, and FinTechs in particular. LendingClub expects 31 bps lower charge-offs going forward due to tighter credit standards. At Discover – a bellwether for personal loan performance – the net charge off rate jumped 92 bps YOY to 3.62% – the largest increase in several years.
  • Card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses going forward. American Express increased loan loss provisions 33% although loan growth was only 14%.
  • GS & Morgan Stanley remain comparable in market cap, revenues, and margins – are focused on lending to improve ROE. MS is doubling the size of its warehouse lending footprint. GS continues to invest in Marcus and aggressively pursue M&A. If GS executes on its strategic plan of generating, in 5 years we should observe a growth in ROE from their consumer lending activities.
  • Bank FinTech partnerships, and M&A continues. Banks are either partnering with FinTechs or investing in beefing up their technology capabilities in payments, lending, digital banking and wealth management. Banks like JP are partnering with Amazon by rolling out co-branded checking accounts and credit cards. A specter is haunting financial services – the specter of Amazon.
  • Lenders are taking actions to pass rising rates on to borrowers to protect margins and investor returns. Lenders are also trying to reduce all-in funding costs by reducing the credit spreads on their securitizations.
Source: PeerIQ

Read the full report here.

 

Fintech Holds Great Promise To Expand Credit, Says Fed’s Bank Supervision Ace (Forbes), Rated: AAA

Fintech holds great promise to expand credit, Federal Reserve Vice Chair for Bank Supervision Randy Quarles told a forum on financial services for the underserved Monday.

While promoting the advantages of algorithm credit rating and other forms of fintech, he voiced it is important for banks to understand the risks when they offer new products of their own or partner with emerging fintech companies.

Touching on another issue, Quarles said the decline in lending by small banks to small businesses can be attributed in part by entrepreneurs using big bank credit cards.

THE PE LIFECYCLE CAN BE AUDITED BY BLOCKCHAIN (AllAboutAlpha), Rated: AAA

The hyperledger fabric is an open-source cross-industry collaborative effort to create a standardized enterprise code base. No cryptocurrency is required, the network is permissioned, and the system of consensus is PBFT rather than proof of work.

That latter point is important in the finance/auditing context, and so is worthy of some explanation here. The usual system in blockchains is “proof of work.” The creator of a new “block” within the chain is required to do something mathematically laborious, a calculation, also called “mining.” This is what allows the trustless and distributed consensus that made possible the creation of “bitcoins” and the launch of blockchain as a technology.

But “proof of work” takes up a lot of computational energy, and for some non-currency uses of blockchain it is just too much trouble. So alternatives protocols have developed within the blockchain world, and one of them has the ungainly name “practical byzantine fault tolerance.” That term comes from a game-theoretical issue called the “Byzantine Generals’ Problem,” which is something like the “prisoner’s dilemma” on steroids. But it is generally best to ignore all of that and just to think of the alternative protocol as PBFT.

Avant Founders Raise $ 15 Million for Blockchain Firm, Token Sale (Bloomberg), Rated: A

The team that founded marketplace lender Avant Inc. raised about $15 million to start a firm that will use blockchain technology and digital tokens to motivate companies to share data about customer identities and credit worthiness.

The venture, which is called Springcoin but does business as Spring Labs, is building a decentralized network that seeks to allow lenders, banks and data providers to pay one another for direct access to consumer information, Spring Labs Chief Executive Officer Adam Jiwan said in an interview. Many companies are hesitant to give out customer data due to concerns about regulation and security, while others don’t have a financial incentive to do so, he said.

TD Bank in commercial lendtech revamp with nCino (Fintech Futues), Rated: A

Chalk up another big win for cloud-based lendtech vendor nCino. The North Carolina-based fintech has signed a deal with TD Bank in the US that will put nCino’s Bank Operating System to work for the bank’s corporate and commercial lending divisions, reports David Penn at Finovate.

The technology is already live with employees in the TD Equipment Finance department. nCino’s platform will give prospective business borrowers faster decisions on their loan requests, as well as add transparency to the loan process. The Bank Operating System will also enable the bank’s credit risk management, sales, and underwriting professionals to benefit from insights into TD Bank’s commercial lending portfolio and better collaborate on deals. Built on top of Salesforce.com, nCino’s Bank Operating system features CRM, loan origination, account opening, workflow, content management, business process management, customer engagement, and instant reporting all on a single platform.

How blockchain is affecting banking (Stitcher), Rated: A

In this episode the host John Siracusa and co-host Sarah Bacehowski. Interview Jason Jones co founder of the Lendit Fintech Conference they discuss how blockchain is affecting national and global banking today and how it may impact credit and lending.

Fintech’s Focus Shifts Toward Finance (CFO), Rated: A

The financial technology industry is maturing at a dizzying pace, having exceeded a combined $31 billion in total funding last year alone, according to KPMG’s recent Pulse of Fintech report.

With this sustained influx of funding, innovations within the space are moving traditional banks to partner up with fintech firms. That benefits both sides as well as customers like corporate finance departments.

On Deck Capital and Lending Club have both recently found themselves in publicly precarious situations related to risk management. On Deck has had to change its strategy several times over the years to address investor concerns. Lending Club experienced a systematic fraud issue that resulted in a CEO departure, stock-price drop, and public cynicism. Other, smaller companies have faced similar problems stemming from a deficient focus on this important role.

Top 5 Debt Consolidation Loan Companies for 2018 (Student Loan Hero), Rated: A

Using a personal loan to consolidate debt can simplify your financial life. But this move is most worthwhile if you can get debt consolidation loan rates that are lower than what you’re currently paying.

This overview can help you quickly find debt consolidation loan companies with the best rates. From there, you can find the lender that offers the best rates and terms to help you get ahead of your debt.

Source: Student Loan Hero

Omnichannel and Short-Term Lending (Lendit), Rated: A

Research conducted in late 2016 noted that three things were apt to cause the average customer to end his or her interaction with a company. These included being transferred between multiple employees when seeking a resolution to a problem, long wait times, and having to repeat themselves during a transaction process. To solve these kinds of discrepancies between customer expectations and the quality of service provided across multiple platforms, more companies are taking an omnichannel approach to the customer experience—especially in the financial services industry.

Below are three questions and answers about how this novel approach to customer experience can benefit both short-term lenders and borrowers.

  1. What does the omnichannel approach offer businesses and customers in the short-term lending industry?
  2. What obstacles stand in the way of the mass adoption of omnichannel lending?
  3. What is the best way for short-term lenders to implement an omnichannel model?

LAUREL ROAD DEBUTS TRULY DIGITAL MORTGAGE PLATFORM (PR Newsire), Rated: A

Laurel Road, an online lender and FDIC-insured bank, today debuts a truly digital mortgage product that uses the company’s secure lending technology to offer home buyers and owners personalized mortgage options at real, competitive rates. Laurel Road’s platform builds mortgages entirely online, simplifying the process with transparent fees and a customized end-to-end digital experience with human support only when customers need it.

Additional product features include:

  • Truly digital experience – Laurel Road’s mortgage product puts customers in the driver’s seat by enabling a digital-first user experience, with human support via phone or online chat as needed but never required outside of closing
  • Stated pricing – Customers who have a price range or specific house in mind can input these details upfront to generate customized options and rates
  • Maximum affordability – By inputting basic financial information, customers can determine the maximum affordable loan they’re eligible for early in the process with no commitment required
  • Added savings – Customers have the ability to earn savings off their closing costs by using the online capabilities throughout the process, such as data verification
  • Optimized for efficiency – Digitally-enabled experience and built-in incentives for options that streamline the process allows Laurel Road to invest more in customer experience and deliver mortgages in just a few weeks
  • Educational resources – Prompts integrated into the user journey will help customers establish their financial readiness and evaluate how Laurel Road can be a partner in the process
  • Expert options and clear terms and fees – Based on a customer’s preferences, 3 unique mortgage options are presented in a transparent way so one doesn’t get caught with misleading teaser rates or hidden fees
  • Soft credit pull – Laurel Road will conduct a soft credit pull during preliminary stages to avoid credit penalties when customers are still exploring options

DiversyFund Hires New Chief Technology Officer (Digital Journal), Rated: B

DiversyFund has named Mark Brogowicz as its new Chief Technology Officer as the firm ramps up its efforts to reinvent alternative investing through its revolutionary crowdfunding platform.

Brogowicz will lead the firm’s product and engineering teams. Brogowicz previously helped Los Angeles startup PeerStreet launch their product and is now looking to replicate that process in San Diego.

MassChallenge wants to pair fintech startups with finance giants (Boston Business Journal), Rated: B

MassChallenge is preparing to launch a program for startups specializing in financial services technology, or fintech — a fast-growing field that’s increasingly a top priority for Boston’s investment firms, banks and insurance companies.

While details are still being worked out, the program is expected be similar to the Boston-based organization’s accelerator for health technology startups, according to MassChallenge. That program, known as Pulse@MassChallenge, pairs later-stage startups with some of the industry’s biggest local and national players, like Aetna and Vertex Pharmaceuticals. The program provides them with mentoring, office space, and an opportunity to compete for cash prizes.

Shinnecock Partners Publishes an Investor’s Guide to Fine Art Secured Lending (PR News), Rated: B

Shinnecock Partners, a 28-year old family office boutique with significant expertise in alternative finance and fintech, has published “Creative Collateral: Lending Against Fine Art,” by the firm’s founding partner, Alan C. Snyder and co-authors/firm analysts Michael Cervino and Christian Williams. The 16-page report outlines a little-known niche investment opportunity, art-secured lending, which, as reported by Deloitte, is a $15 – $20 billion market that is growing at an annual rate of 13 percent.

The research paper covers:

  •     An overview of the market and the “buzzword” lexicon
  •     Key factors to consider
  •     Risk mitigants
  •     An investor participation road map

You can access the report at: 

Private Lending Association to Offer Class for Certified Fund Manager Designation (PR Newswire), Rated: B

The American Association of Private Lenders (AAPL) is offering the Certified Fund Manager (CFM) designation class May 9, 2018, at the Geraci Activate Conference, located at the Sofitel Hotel in Beverly Hills, California. AAPL members are eligible for the CFM designation and may register for the class at  or  The CFM designation class requires a separate registration from the Geraci Activate Conference.

Seek Capital Wins Again, #1 Customer-Rated Lender for the Business Loans Category from LendingTree in Q4 2017 (PR Newswire), Rated: B

On LendingTree’s platform, Seek Capital has a 4.9 out of 5 star rating. 57 different businesses have reviewed Seek Capital on LendingTree.

Seek Capital specializes in getting startup business loans for new businesses. While there is a large array of funding options for established businesses, new businesses are left with little to no options. Seek Capital provides solutions to this under-serviced segment of the business funding market. In 2017, Seek Capital originated close to $100 million for startup businesses in the form of an unsecured line of credit.

United Kingdom

LendInvest changes commercial property products (Mortage Introducer), Rated: AAA

Borrowers wishing to fund the purchase of, extend the lease on, or refurbish a commercial property where the use will remain commercial, are directed to the updated commercial bridging product.

LendInvest has increased the maximum term for its commercial bridging loans from 12 to 24 months, and reduced rates.

Its commercial bridging rates vary between LTV but the base 60% has been reduced from 0.90% to 0.79%.

Best refer-a-friend schemes: how you can earn up to £500 (Which?), Rated: A

NatWest has launched its first ever refer-a-friend scheme, which could earn eligible customers up to £500 – and it’s not the only company offering incentives for signing-up your loved ones.

Until 20 April 2018, eligible customers will receive up to £500 when their friends and family join NatWest. But it’s not open to everyone, with NatWest randomly selecting 300,000 customers for the test phase.

Refer-a-friend: current accounts

Earn £500 with NatWest-NatWest recently launched its first ever refer-a-friend scheme, offering existing members the chance to earn up to £500 by recommending its current accounts to friends and family.

Earn up to £500 with Nationwide-Nationwide is offering existing members the chance to earn up to £500 by encouraging friends and family to switch their current account.

Earn £25 with Vanquis -Vanquis Bank customers could earn £25 for convincing friends and family to sign up to the Vanquis Credit Card.

Earn £25 vouchers with Scottish Friendly-Customers of Scottish Friendly could earn £25 by introducing a new friend or family member to the company.

P2P securitisation boom still on the cards (Peer2Peer Finance), Rated: A

PREDICTIONS of a securitisation boom in the peer-to-peer lending sector last year failed to materialise, but analysts are still optimistic about the market.

Ratings agencies such as Moody’s predicted a boom in P2P securitisations, but the only activity in 2017 was a £208.9m Zopa deal led by investment trust P2P Global Investments.

Ratings agency S&P Global is also expecting more activity and has predicted a 30 per cent increase in securitisations from marketplace lenders around the world during 2018.

7 TECH STARTUPS THAT ARE TAKING IRELAND BY STORM (Irish Tech News), Rated: A

Pro-business policies have made the country an extremely favourable environment for startups, and the capital can lay a convincing claim to be Europe’s Silicon Valley. Here are just seven of the most interesting and highly awarded startups finding success in Ireland.

Mingo- Mingo are aiming to replicate the success of digital currencies like Bitcoin and Ethereum by floating their own currency called (quite logically) Mingocoin.

Trezeo- Firms are using digital tools to revolutionise the process of transferring and storing traditional currencies as well as digital-only ones. Trezeo are a perfect example of this mindset, and offer a product that’s of use to the everyman rather than the big financial institutions.

FlenderFlender is one of the success stories from crowdfunded investment platform Seedrs. The premise: peer-to-peer lending, where lenders can set their own rates and terms for borrowers to agree to.

Don’t Innovate for Innovation’s Sake. Understand the Need for Change. (Retail Tech News), Rated: A

Here, Luke Griffiths (pictured below), general manager, Klarna UKexplains why that means it’s crucial that retailers consider the shopping journey from browsing through to purchase, delivery, and returns.  

It’s no longer good enough for retailers to wait on the sidelines while others make the first move into innovation – something which was highlighted in a recent white paper Klarna produced in association with Internet Retailing. In it, we explored the main qualities needed to be successful in today’s ever-changing retail sector.

Retailers can’t afford to ignore more innovative payment options. This was highlighted by recent Klarna research, which found that 53% of shoppers are looking for new, easier ways to pay online; while 56% would buy more online if there was more variety in payment options available.

 

British Business Bank provides 1pm with £35m funding line (Leasing Life), Rated: A

The British Business Bank provided 1pm Group with a £35m asset finance facility which will be used mainly on hard assets through its subsidiary Bradgate Business Finance.

At the end of February 1pm has entered into a cooperation agreement with Mintos to be a loan originator on its online marketplace for loans.

1pm is the first loan originator from the UK to access the Mintos marketplace and joins approximately 30 other loan originators globally.

 

 

It’s time to crack down on high-cost credit cards, says Labour MP (The Investment Observer), Rated: B

Stella Creasy is hoping to crack down on high-cost credit cards, introducing a cap on fees and interest charges.

The Labour MP, who was credited with the caps on interest rates and fees charged by payday loan companies, will attempt to enforce similar laws for credit cards on in Parliament on Tuesday.

The FCA has ruled out capping credit card costs after reviewing the market last year.

 

China

Apple App Store Said to be Blocking Chinese Peer to Peer Lenders from Updating Apps (Crowdfund Insider), Rated: AAA

We have received some information from an insider regarding Chinese peer to peer lending platforms being unable to update their Apps in the Apple App store due to a regulatory disconnect.

The problem is that not a single Chinese peer to peer lender has passed the necessary evaluations as regulators have not yet processed any. The first batch of approvals from the Chinese authorities is due at the end of April with the deadline by the end of June. According to the source, it is even more perplexing due to the fact that having an updated iOS App is necessary to comply with the Chinese regulations and pass the tests.

The Apple enforced process is described as follows:

  • We need to update our iOS App so that we can provide updated features to customers that are in compliance with regulations
  • Local financial regulators will not allow us to complete the record-filing process if they see that we have not come into compliance across all of our platforms (Android, iOS, PC)
  • If we can’t complete the record-filing process, then we will not be allowed to update our business license to include “internet loan information agency” in permitted activities
  • If we can’t update our business license, we can’t provide the necessary documentation to App Review to have our App Update approved
  • If we can’t get our iOS app updated, then we won’t be in compliance with regulations
  • Dead-end feedback loop back to point #1….
European Union

Vanguard Teams With German Fintech Raisin (Investopedia), Rated: AAA

Vanguard, the king of passive investing and one of the world’s largest fund managers, is partnering with Raisin, the German fintech, enabling some of its investments to be sold on the fintech’s platform.

Raisin, among Europe’s largest fintechs, counting more than 100,000 customers, will offer four portfolios comprising index or exchange-traded funds from Vanguard and BNP Paribas. The Financial Times reported that the investment portfolios have annual costs on average that are less than 0.5%. According to The Financial Times, this is the first time Raisin is getting into the investment area, previously focusing its efforts on brokered savings deposits.

Banks deploy ID software for client verification (Financial Times), Rated: A

Banks have begun to implement new technologies to help verify who the customer is, though the new GDPR rules in Europe could complicate usage; the General Data Protection Regulation, which will restrict how companies collect and store data, allows for customers to ask for their data to be removed and non compliance results in huge fines; banks have started to slowly add new technology but they are still figuring out where to limit storage; new companies are trying to sell services into bank that allow them to collect information but store it in a certain way to be compliant; with new technology being developed so rapidly, governments need to ensure they keep up with innovation and clearly tell the market how to comply.

German fintech Penta launches new business banking platform (AltFiNews), Rated: A

Berlin-based Penta has announced its newest fintech “Compass”, a platform that allows incorporating businesses in Germany to deposit their share capital and open a bank account in under 24 hours.

According to Penta, incorporating a business can take up to 6-8 weeks because of the bureaucratic process of opening a bank account and registering with the correct government bodies, which is legally required in Germany. Penta’s latest proposition will allow founders to open a bank account in a process that takes less than 15 minutes, completing the whole process online for free.

 

International

BBVA-backed fintech launches global bank account (American Banker), Rated: AAA

A new fintech backed by the Spanish bank BBVA aims to do something that others before it have failed to do: simplify international payments.

The fintech, Denizen, claims it has created a “global banking platform” that allows customers to receive money in one country and pay it out in another immediately, avoiding international transfer fees and eliminating currency exchange fees.

The firm says the cross-border money movement service is the first in a planned series of products. Denizen is currently available to expatriates living in Spain and the United States. The service is set to expand in 2018, adding as many as 10 European Union countries in the second half of the year as well as the United Kingdom.

Finastra appoints new CTO to lead next wave of financial services innovation (Fintech Finance), Rated: B

Finastra today announced that Eli Rosner has joined the firm as Chief Product and Technology Officer. Eli is responsible for global product and technology strategy and will support Finastra to deliver world class products, fully integrated solutions and its open FusionFabric.cloud platform for innovation.

Eli brings more than 25 years of industry experience to the role at Finastra. He joins from NCR Corporation where he served as CTO and Head of Product Management. Based in London, Eli will lead a global team of strategy and product managers, enterprise architects, data scientists and software engineers.

Australia

Online lender launches new loan portal (The Adviser), Rated: AAA

A custom-built introducer portal designed to facilitate fast, real-time processing of loan applications for brokers has been launched by an Australian marketplace lender.

Online lender Zagga this week launched the new portal, which uses custom-built algorithms to match wholesale investors with borrowers.

Speaking to The Adviser, Zagga CEO Alan Greenstein said the portal would provide brokers with simple, fast, and direct access to the loan application process from start to finish.

Sydney Angels funds QPay $ 570k to steal millennial students from banks (Finextra), Rated: A

Australia’s first ever student marketplace app, QPay, has raised $570,000 from a series of high profile investors, including Sydney Angels and the Sydney Angels Sidecar Fund 2, to break into student banking through the release of a student-targeted QPay MasterCard.

QPay aims to use the QPay MasterCard to capture the largest cluster of millennial consumers at the point when they’re most likely to begin making serious financial decisions – when enrolled in tertiary education.

Asia

How Alibaba and Tencent became Asia’s biggest dealmakers (Financial Times), Rated: AAA

The China Music story shows just how hard it can be to say no to Tencent — and the other big player in the Chinese tech world, Alibaba. With their large resources and long-term perspective, the two Chinese groups are transforming Asia’s investment landscape, posing challenges for private equity and venture capitalists as well as the start-ups looking for funds. In some parts of the region, SoftBank, the Japanese investment group, is playing a similar role.

The reach of Tencent and Alibaba in their home market dwarfs that of the big tech groups in the US. While the latter accounts for less than 5 per cent of all venture capital flows in their home market, Alibaba and Tencent account for 40-50 per cent of venture capital flows in mainland China, according to data from McKinsey.

If the venture capital market in China has become a fierce battle between Alibaba and Tencent, in other parts of the region it is often a three-pronged competition that also includes SoftBank.

 

Can Korean entrepreneurs help create Indonesia’s next unicorn? (The Investor), Rated: A

Indonesia is home to four unicorns — startups whose value reaches over US$1 billion — Go-jek, Traveloka, Tokopeida and Bukalapak. But the world’s fourth populous country with more than 250 million potential spenders wants more such success stories.

“Currently, we have four startup unicorns from Indonesia but none are from fintech services. I hope to see the next unicorn from this field,” said Rudiantara, adding that he believes P2P lending fintech startups have a chance to become the next unicorn.

His wish may soon become a reality as Indonesia’s market potential, combined with the government’s push for creating a startup hub are attracting aspiring entrepreneurs from all around the world.

Africa

How technology is changing wealth management (Money Web), Rated: AAA

The investment world is no different. Robo-advice is but one small part of the broader fintech landscape, but it has already made a major impact on the investment space through improved access and by allowing investors to plan for specific needs without the use of a traditional advisor. Technology has also made pricing more competitive.

According to Accenture, global investment in fintech ventures tripled from just over $4 billion in 2013 to more than $12 billion in 2014.

Authors:

George Popescu
Allen Taylor

What Investors Should Know About Non-Bank Lenders

nonbank lenders

Investors looking to add private debt and private equity to their portfolios may feel overwhelmed by all the choices. From peer-to-peer lending to crowdfunding, there are countless industry players across a wide range of alternative lending and financing models, serving everyone from individual borrowers to small and medium-sized businesses. Any funding model ultimately comes down […]

nonbank lenders

Investors looking to add private debt and private equity to their portfolios may feel overwhelmed by all the choices. From peer-to-peer lending to crowdfunding, there are countless industry players across a wide range of alternative lending and financing models, serving everyone from individual borrowers to small and medium-sized businesses.

Any funding model ultimately comes down to matching the needs of those who want capital with those who can supply capital. Typically, banks or other large financial institutions would act as the intermediary between investors and borrowers or entrepreneurs. But with many banks pulling back after the financial crisis, and the internet making it easier than ever to play matchmaker, the alternative finance universe is attracting more and more capital.

However, there is still broad-based confusion among both institutional and retail investors about the differences between the various alternative funding models. This confusion is exacerbated by how often the terminology is used interchangeably in the media and the larger financial community. The truth is that each funding model has distinct nuances, rewards and challenges, and it’s important for investors and their financial advisors to understand the differences before incorporating alternative lending or financing into an investment portfolio.

In general, these models can be broken down as either debt or equity investments, with a similar risk-reward profile as any other debt or equity investment.

DEBT (lower risk, lower reward)

Peer-to-peer lending

In a peer-to-peer (P2P) lending model, an individual or business borrows from an outside source or sources – a “peer” – rather than a bank. This process is facilitated through a third party, such as an online platform, which makes it easier to aggregate enough peers to fund the loan. These loans typically come with fixed terms and set repayment schedules. Many loans will also include details about the borrower—such as their income, credit score, occupation, and risk level—to help the “peers” (or lenders) determine whether to fund the loan and at what amount. Examples of peer-to-peer loans include consumer loans, student loans, small business loans, and fix and flip loans on single family homes.

Investors can get into the peer-to-peer lending market by purchasing the whole loan, a fractional interest in a loan or building a portfolio of fractional and/or whole loans. Investors then collect the proceeds of each loan payment, with the peer-to-peer lender taking a fee to cover the costs of running the platform. While even the most creditworthy borrowers may default on their loans, investors can mitigate this risk by building a diversified portfolio that includes multiple loans across different risk spectrums. Investors should also consider if the P2P loans they are investing in are unsecured or have some form of collateral securing the loan. Consumer and student loans tend to be unsecured, while small business and fix and flip loans tend to be secured.

Marketplace lending

Marketplace lending is another term used to further describe peer-to-peer lending. While the two terms are used interchangeably, an important differentiator is the source of capital. Whereas P2P lending platforms tend to rely on a group of small retail investors or large institutional investors to fund loans, marketplace lenders prefer to first pre-fund loans and then offer them to investors.

The marketplace lending model, therefore, offers qualified borrowers a guarantee that their loan will be funded within a specific timeframe, which may be an important consideration for some borrowers. For example, while a consumer borrower may be willing to wait until his loan is assessed and funded by multiple peers, a borrower looking to finance a real estate transaction has a closing date that must be met otherwise he will lose his down payment.

Direct lending/balance sheet business lending

In contrast to marketplace or peer-to-peer lending models, a direct lender will rely on its own balance sheet or proprietary access to funds as its primary source of capital. Instead of having to find enough retail and institutional investor capital to match the needs of borrowers, a direct lender can look to its unrestricted access of funds before making a lending decision.

The advantage of this approach is that the direct lender is better positioned to survive a potential downturn since each of the loans on its balance sheet represents a piece of collateral that can be used to offset any potential losses. Investors in these loans will therefore have a better opportunity to allocate capital in all market cycles. Many direct lenders may also manage a fund for accredited investors that consists of a portfolio of some, but not all, of the loans made by the lender.

EQUITY (higher risk, higher reward)

Crowdfunding

In the crowdfunding model, investors are given the opportunity to provide seed capital in up-and-coming products and businesses. Capital is provided in several forms including equity, preferred equity, mezzanine debt and senior debt . While equity stakes are typically small—often less than 1%—even a modest upfront investment can generate a large eventual payoff if the company is successful. This is particularly true of technology start-ups, which can grow quickly if their product or service is well received among customers.

This model is also popular in the arts and entertainment industries. For example, people might choose to fund an independently produced movie, music album or play in exchange for a small piece of revenues and/or additional perks like attending rehearsals and premiere parties, meeting the artist, or receiving a memento from the set. In real estate, crowdfunding is most typically used by developers seeking to raise money to fund development or redevelopment projects.

Investors should find out if the crowdfunder is providing equity and debt on the same project. This is critical should a recovery plan need to be put in place if the project does not go as expected. Typically, equity investors want to hold on and wait for an increase in value , while debt investors want to liquidate immediately in hopes of recovering their investment. A crowdfunder that is representing both equity and debt investors in the same project will have a conflict of interest. In addition, these investments also tend to be fairly illiquid, so investors should tread carefully. While these early stage equity investments could potentially pay off handsomely, there’s always the risk that the company or project is a flop.

Initial coin offerings

An initial coin offering, or ICO, is a brand-new type of funding model that is attracting many of the same types of companies that previously relied on crowdfunding. However, instead of acquiring an equity stake in the company, investors in ICOs receive cryptocurrency coins, like Bitcoin or Ether, which are redeemable for cash on certain exchanges. The idea is that as the company grows and becomes more valuable, the coins will also become more valuable.

Since ICOs are still loosely regulated, investors should take extra precautions when evaluating a crypto-related investment opportunity. While a business idea may sound great on paper, investors should look for growth signs like recurring revenues and a large potential market.

These five models only scrape the surface of the full universe of funding options for individuals and businesses. A company or a funding model doesn’t always fit neatly into a box either, and investors should take care to understand how each funding platform generates revenue and where its capital comes from.

When choosing which segment of the market to pursue, investors and advisors should also consider their risk tolerance, which will help determine whether a debt or equity investment is most appropriate, and at what scale.

Author:

Written by Evan Gentry, CEO of Money360.

Using Bitcoin for Small Business Loans on a Global Scale

BitBond cumulative loan volume

In the last couple of years, blockchain technology has disrupted multiple segments of traditional finance. Lenders are beginning to see the advantages the technology offers and how it can help to improve their existing processes. It is still in a nascent stage in alternative lending with  massive room for growth. One such company is Berlin-headquartered Bitbond, […]

BitBond cumulative loan volume

In the last couple of years, blockchain technology has disrupted multiple segments of traditional finance. Lenders are beginning to see the advantages the technology offers and how it can help to improve their existing processes. It is still in a nascent stage in alternative lending with  massive room for growth. One such company is Berlin-headquartered Bitbond, which launched in 2013 as the first global marketplace for small business loans using cryptocurrency Bitcoin as the nodal currency for loans.

Bitbond’s Story

While working as a consultant, Founder and CEO Radoslav Albrecht witnessed the inefficiencies prevalent in bank lending processes, which led him to develop a global online lending platform that can be accessed by almost every SME around the world.

While brainstorming the idea for his startup, he came across the problem of processing cross-border payments and realized traditional remittance methods are extremely expensive and time-consuming. He stumbled upon Bitcoin and realized it is the perfect alternative for transmitting money across borders in an efficient, cheaper, and safer way.

In 2013, he partnered with a software developer from Berlin to launch Bitbond, but they soon parted ways and Albrecht became the sole owner of Bitbond.

Business Model

Bitbond has an uncluttered business model primarily focusing on small business owners like retailers, online stores, and restaurants who have a working capital requirement. Average loan size is $12,000, and loan periods range from 10 weeks to three years. The company caters to businesses all around the globe. Both individuals as well as institutional investors invest in the platform.

As far as revenue is concerned, it charges an origination fee paid upfront by the borrower, which usually ranges from 1%- 2.5% depending on the duration of the loan. For every loan repayment, the company charges 1% from the investor as a loan servicing fee.

Technology

Extensively dealing in Bitcoin to orchestrate payment processes, Bitbond’s process is simple and secure. Investors fund loans with fiat currency and that currency is converted into Bitcoin on the platform. Once that process is complete, a borrower is paid in Bitcoin and can choose a payment method or get the coin transferred to their bank account withdrawing the money after converting the Bitcoin back to the user’s native fiat currency. Bitbond has partnered with Bitpesa, an online payment platform, to convert Bitcoin to pay off loans and process payments across different countries. It has also partnered with Bit4coin, an Amsterdam-based Bitcoin company, that converts Bitcoin into Euros.

Because Bitcoin is relatively new, bank integration is still a problem. Therefore, in some countries, borrowers have to go to a Bitcoin exchange to get currency converted. But the company is trying to tackle this issue by adding more banks to its network. Thus far, they’ve integrated with banks in over 50 countries.

Key Success Factors

The fact that Bitbond exclusively deals in cryptocurrency gives it the ability to lend anywhere in the world. This geographical freedom is what gives Bitbond an upper hand over its rivals. Other lenders dealing in SME funding like Kabbage and OnDeck are no doubt bigger than Bitbond in terms of size, but they are active in only developed markets like the U.S. and the UK. Borrowers already have multiple options whereas Bitbond enjoys negligible competition in dozens of markets across the world.

The firm is also partnering with multiple e-commerce platforms that refer their online sellers to Bitbond. It is a win-win as the e-commerce platforms are able to add value to sellers’ operations while Bitbond is able to partner the company across multiple countries.

Key Performance Indicators (KPI)

ndSource: BitBond
Source: BitBond

It’s a fully regulated financial service institution under German law with a loan volume that stands at $4.5 million. Out of that, $3.5 million was originated this year alone. Bitbond is hoping to grow on a 10X basis for the coming couple of years.

Customer Profile

Bitbond focuses on small online retailers on platforms like eBay and Amazon. They usually have annual revenue between $200,000-$300,000. The loans are typically for buying larger quantities of inventory at a better price. It is able to reach loan decisions in an hour, and even in difficult cases, Bitbond does not take more than two days to get back to the borrower with an answer. This is the reason why small online retailers prefer Bitbond to other financing options. When the company started off, the majority of traffic came from the U.S. but the bulk has now shifted to Europe and Africa.

Lender risk assessments of the future will be much more automated and help cut down loan application processing times. Lack of flexibility when it comes to products is another area where the industry will see a change. Down the road, products will be customized as per the need of the particular business as compared to a one-size fits all approach currently followed.

Future Plans and Company Leadership

Bitbond wants to grow stronger in Europe and Africa, but they also want to tap neglected regions of the world. Secondly, the firm also wants to explore other verticals like secured lending for offering higher ticket loans. They wants to develop a large secured loan marketplace where the collateral is digitally liquidated as compared to the investor or platform physically having to obtain possession.

Albrecht has a degree in economics and, prior to Bitbond, worked as a senior consultant at Roland Berger advising banks around the world on restructuring strategy. Bitbond has so far raised a total of $7.5 million in various rounds of funding with $5 million of it as debt. Obotritia Capital is the lead debt investor and Sekip Can Gokalp led the last equity fund raise of $1.2 million.

Conclusion

There is no doubt Bitcoin is the future and the industry will continue to grow at a neck-breaking pace. Bitbond will definitely reap rich benefits for starting early, and it’s global play is something investors, both debt and equity, would love to participate in for a combination of scale and diversification.

Author:

Written by Heena Dhir.

Secured Property Investing in the UK

property investing London

Omni Secured Lending is the alternative lending arm of the investment manager Omni Partners and is based out of London. They provide secured loans against residential as well as commercial UK properties. Since 2014, they have launched three successful secured lending funds: OSL I, II, and III, and they have provided superior risk-adjusted returns to […]

property investing London

Omni Secured Lending is the alternative lending arm of the investment manager Omni Partners and is based out of London. They provide secured loans against residential as well as commercial UK properties. Since 2014, they have launched three successful secured lending funds: OSL I, II, and III, and they have provided superior risk-adjusted returns to investors in all three funds. The majority of funding in the first two was secured from high net worth (HNW) Americans or family offices. The third fund has had massive interest from institutional investors and funds of funds.

The Amicus Platform

From distribution to underwriting down to servicing and recovery, everything is done in-house, and funding is a combination of both internal as well as external sources with the majority being third-party funding. Basically, Amicus is a lending platform providing professional property investors across the UK access to short-term finance solutions.

The average loan size provided by Amicus is £750,000, and the portfolio is split between 75% residential and 25% commercial properties. The company also operates in the PDR (Permitted Development Rights) segment meaning they are able to convert commercial properties into residential without having to apply for planning permission. This is an emerging opportunity allowing the lender to focus on the niche for better returns.

The Idea Behind Amicus

Born in 2004, Omni went from an equity-only event-driven strategy to adding private debt, and  this proved to be a master stroke as the company did reasonably well during the global crisis. The man behind the strategy was Steve Clark, founder of the company.

Clark realized the chink in the working of traditional banks and realized flexible lenders are the future of the financial industry. He also saw how multiple segments had been vacated by brick-and-mortar banks. Being a property trader himself, he knew the pain points of builders and realtors. While researching the field, he came across the bridge financing market. After thoroughly understanding the nitty-gritty of the market, he rolled out Amicus in 2009.

Elissa Kluever: The Heartbeat of OSL

Elissa Kluever has extensive experience in equity capital marketing. Before joining OSL, she was with Pipper Jeffrey, a prestigious investment bank headquartered in the US. She was in their equity capital market division, which was responsible for raising capital for companies, and later shifted to their London office. In 2009, she joined Omni Partners and now is the partner and managing director of the credit and lending funds division.

Kluever is the nerve center between all concerned parties: Omni Partners, the manager, and the investors. She also takes care of the Amicus.

Fund Structures under Amicus

Omni’s first fund was Omni Secured Lending I and was launched in February 2014. It raised $44 million and returned 112% of original investor capital in less than 27 months. It was also able to achieve a yield of 9.8% net IRR.

The second fund was OSL II , which was launched in April 2015. It raised $240 million while delivering a net IRR of 10.5%. Buoyed by the success of its two lending funds, the company recently launched its third installment of the fund and raised $432 million. The current net IRR of OSL III stands at 8.6%.

Types of Investors

All three funds target a different type of investor.

  1. Vintage 1 targeted HNW family offices along with single- and multi-family offices. The majority of those were US investors even though the deployment of funds is in the UK.
  2. Vintage 2. After the success of the first lending fund, advisor communities like debt funds or funds of funds also showed interest in the second fund.
  3. Vintage 3. In the third installment of lending funds, pure institutional investors joined in as the obligation to provide returns in a record low-interest rate scenario triggered their shifting from bonds to private debt.

Features:
The fund hedges the foreign exchange rate (FX) exposure for American investors and safeguards investor money from FX fluctuations. Amicus enters into a 3-month future contract which provides cover against any adverse FX movement.

Secondly, what makes the fund particularly attractive for American investors is the low LTV of 62% and the stringent lending rules of the UK, which guarantee full recourse to the borrower and his personal assets. In the US, investors have limited recourse. If the borrower walks away from the property, the lender can’t pursue him personally.

The gap between supply and demand of housing stock in the UK makes the economic cyclical fluctuations redundant. Hence, the fix-and-flip housing strategy is a safe bet in the UK, and especially in a market like London. The UK has a shortfall of at least 1 million houses, thus ensuring the demand will remain strong for the foreseeable future.

Author:

Written by Heena Dhir.

Tuesday February 28 2017, Daily News Digest

Lendix

News Comments Today’s main news: Prosper closes loan purchase agreement for up to $5B in loans with Consortium of Institutional Investors. Zopa, FC awarded Superbrand status. OnDeck launches Australian broker push. Today’s main analysis: Lendix Review. Today’s thought-provoking articles: Questions about SoFi’s funding round with Silver Lake. Zopa mulls move into secured lending. United States Prosper closes loan […]

Lendix

News Comments

United States

United Kingdom

  • Zopa, Funding Circle awarded Superbrand status. GP:” Well deserved. Their brands have gone beyond the UK many times over.” AT: “Marketplace lending is much more mainstream in the UK than in the U.S. Congratulations.”
  • Zopa mulls move into secured lending. GP:” Secured lending is never in fact completely secured. The trap is usually, like with mortgages in 2008 believing it is 100% secure. It is just more secure than unsecured, that’s all. But nice to see Zopa is seeking new market for expansion. Perhaps extending beyond the UK would be another natural step?” AT: “Exansion is good.”

European Union

Australia

India

News Summary

United States

Prosper Closes Loan Purchase Agreement for up to $ 5 Billion of Loans with Consortium of Institutional Investors (BusinessWire), Rated: AAA

Prosper Marketplace, a leading online consumer lending marketplace, today announced that it has closed a deal with a consortium of institutional investors to purchase up to $5 billion worth of loans through the Prosper platform over the next 24 months. The investors in the consortium are affiliates of each of New Residential Investment Corp., Jefferies Group LLC and Third Point LLC, and an entity of which Soros Fund Management LLC serves as principal investment manager. The consortium will also earn an equity stake in the company based on the amount of loans purchased, further aligning the group with Prosper’s future growth and success. Warehouse financing of up to $1 billion will be provided by a syndicate of lenders including Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley.

Prosper has maintained positive momentum since the second half of 2016, with monthly loan originations growing steadily since July. In addition, the Prosper loan portfolio is delivering solid returns to its institutional and individual investors, with an estimated net return of 7.86%1 for January 2017. Prosper continues to diversify its investor base, and is focused on bringing new banks and other institutional investors onto the platform.

Financial Technology Partners (FT Partners) served as strategic advisor to Prosper Marketplace and its Board of Directors on this transaction. DV01 will be the loan data agent to the consortium.

PeerIQ Partners with 1010data to Offer Hosted Normalized Online Lending Data (BusinessWire), Rated: AAA

PeerIQ, a leading provider of data and analytics to the online lending sector, today announced a new data partnership with 1010data, offering the only integrated cloud platform that combines self-service data management and analytics at scale with ready-to-use data. The two companies will provide investors with turnkey access to the highest quality loan-level data from online lending platforms. This will simultaneously increase research productivity and reduce costs associated with analyzing whole-loans and securities. Leveraging PeerIQ’s universal data models and lender-specific data cleaning processes, the partnership also broadens 1010data’s ability to provide its customers with access to loan-level data in another consumer credit capital markets sector.

Those with authorized access to PeerIQ data can now integrate that data into their full set of workflows on the 1010data Insights Platform, including the ability to:

  • Make ad-hoc, time-series analysis simple and fast using 1010data’s extensive built-in analytical function library
  • Quickly develop, modify, share and automate pre-defined reports; easily run queries and create interactive dashboard applications with 1010data QuickApps
  • Output results into Microsoft Excel and/or build Excel-based applications using the 1010data Excel add-in
  • Combine and analyze PeerIQ data with complementary data sources, such as consumer credit and other econometric data which are already available on the 1010data platform

Term Sheet — Monday, February 27 (Fortune), Rated: AAA

Unicorn watch: SoFi, a San Francisco online lending startup, raised $500 million in new funding led by Silver Lake with participation from existing investor SoftBank Group, and GPI Capital, confirming a Wall Street Journal report from earlier this month. The round reportedly values SoFi at $4.3 billion, up from the company’s last valuation of $3.2 billion. SoFi CEO Mike Cangey would not confirm the valuation, but said $4.3 billion was “in the right zip code.” A couple of notes:

1.Why does it need $500 million? SoFi raised $1 billion from SoftBank Group in September 2015, and it has been “off and on” profitable for the past few years. This money isn’t going toward its actual loans. SoFi currently has 250,000 members and originates $1 billion in credit per month.

2. It’s an ambitious plan.

3. “At least one” of the big banks have tried to acquire SoFi, but the company isn’t interested in selling. But Cagney does not want to be a lead generation tool for a bank.

4. Why Silver Lake? The buyout firm has looked at several of SoFi’s past funding rounds, but it was too small for Silver Lake to invest—until now. The firm presents SoFi with a unique benefit: Silver Lake’s limited partners are taking an active role, and some large sovereign wealth fund LPs are buying up some of SoFi’s loans.

Facts About Borrowing Specialized MBA Loans (U.S. News), Rated: A

More b-school students are turning to specialized MBA loans to fund their postgraduate education.

The current fixed rate for graduate PLUS loans for the 2016-2017 school year is 6.31 percent compared with 6.01 percent for a 10-year fixed-rate loan at New York-based CommonBond – a 30 percentage point difference. CommonBond’s fixed rate is just one rate, and it’s available to MBA students who are enrolled at certain b-schools.

Experts say lenders feel more comfortable lending to in-school MBA students compared with other graduates because of their future earning potential.

Citizens Bank currently offers fixed rates as low as 5.1 percent on a 10-year $10,000 loan to business students – that’s much lower than the lowest rate the financial institution offers graduate students who are not enrolled in a graduate law, medical or business program.

Chicago-based Discover Student Loans offers a Discover MBA Loan product to b-school students. Current variable rates on a 20-year $10,000 start at 3.74 percent with the lowest fixed rate available at 6.24 percent. But the company offers a 0.25 interest-rate deduction for enrolling in automatic payments.

VeriComply Completes Angel Funding Round: Investors Include Marketplace Lending Industry Vets (Crowdfund Insider), Rated: A

VeriComply, a company that automates the verification of marketplace loans for the secondary market, announced on Monday it completed its latest Angels funding round. Investors in the funding round included Jon Barlow, founder of Eaglewood Capital and John Maute,  co-founder of Helios AMC and Situs Holdings, a global real estate diligence firm, and board member of Money360, a CRE marketplace lending platform.

Explainer: How neural networks are changing credit scores (Tradestreaming), Rated: A

A credit score has a major impact on a person’s life. It’s the key to getting a car loan, a house or an apartment. The traditional way scores are calculated is a method called logistic regression, which means assigning a value to a number of factors in your financial life (for example, payment history, number of credit accounts, length of credit history) and weighing them.

But credit bureaus are now looking into other ways to determine an individual’s credit history beyond the result of a static formula. They’ve integrated machine-learning into credit scoring methods to get a more balanced picture of someone’s likelihood of defaulting on a debt. But it’s more complex that that — we break down the method.

Artificial neural networks mimic the way the human brain works, so a non-human has the ability to think through the data and assess patterns.

“A neural network more closely mimics the way humans think and reason, whereas linear models are more dogmatic — you’re imposing structure on data as opposed to letting the data talk to you,” said Eric VonDohlen, chief analytics officer at the online lender Elevate, in an interview with American Banker.

NAIC Extends Morningstar Credit Ratings, LLC Designation to Include Financial Institutions, Brokers, or Dealers (Yahoo! Finance), Rated: A

The National Association of Insurance Commissioners (NAIC) has extended Morningstar Credit Ratings, LLC’s designation on its NAIC Credit Rating Provider list to include financial institutions, brokers, or dealers as well as corporate issuers, as of Feb. 22, 2017. Morningstar Credit Ratings’ designation previously covered commercial mortgage-backed securities (CMBS), residential mortgage-backed securities (RMBS), and asset-backed securities (ABS). Morningstar Credit Ratings, LLC is a subsidiary of Morningstar, Inc. (MORN) and a nationally recognized statistical rating organization (NRSRO).

Morningstar Credit Ratings offers ratings and analytical services for CMBS, RMBS, single-family rental securities, ABS, and corporate issuers and financial institutions. Since late 2009, Morningstar Credit Ratings has rated more than 300 structured finance transactions representing approximately $188 billion of securities issuance across various types of CMBS, RMBS, and ABS. Information about Morningstar Credit Ratings’ offerings as well as all of its NRSRO credit ratings, methodologies, and research are available to issuers and investors at .

For more information about the NAIC’s use of credit ratings, please visit www.naic.org.

Third FinTech Forum to discuss artificial intelligence and blockchain (Federal Trade Commission), Rated: B

Artificial intelligence and blockchain. If those terms relate to your company’s work, you might want to mark March 9, 2017, on your calendar.

The first panel of the half-day forum focuses on the benefits and risks to consumers as artificial intelligence is adapted to financial services.

The third FinTech Forum will take place in the Banatao Auditorium, 310 Sutardja Dai Hall, on the campus of the University of California, Berkeley. Registration opens at 8:00 PT and the event convenes at 9:00.

What’s it like Working as a Product Manager? A PM at OnDeck Takes You through His Day (WayUp), Rated: B

We got to talk to Kennan Murphy-Sierra, 2014 grad from Stanford who now works an Associate Product Manager for OnDeck®, the leader in online lending for small business.

What does an Associate Product Manager in your role at OnDeck do?

Kennan Murphy-Sierra: I am responsible for the user experience of our sales agents and small business owners during our financing application process.

Can you take us through what you did at your job yesterday from the second you walked in the office until the moment you left? What key responsibilities do you tackle on a daily basis?

KMS: It went something like this:

  • Impromptu breakfast catch up with the data [team] to talk about testing a project.
  • Daily standup with tech team (we map out the latest updates in our software development progress).
  • Syncing with a product manager in DC about requirements for a project that will enter development soon.
  • Meeting with tech and sales leaders to nail down requirements for a 2017 initiative.
  • Sizing a new core system feature with tech leads to determine expected timeline and headcount.
  • Double-checking some wording with our legal team and then giving the green-light on a release.
  • Taking a break for a blind 12-chocolate tasting contest between our tech team and the website tech team – we won!

Tony Mitchell’s Internet Fund Rides The Trump Rally To Beat The Market (Forbes), Rated: B

Kam: You also recommended Lending Club last year, are you sticking with that stock also?

Mitchell: I am, and I think that the $500 million that SoFi (Social Finance Inc.) is about to raise shows the belief in online lending.

SoFi is a direct competitor of Lending Club and is only about 10% behind Lending Club in the amount of loans that it funded in 2016.

Lending Club has set the standard, and they have made it much easier than going to a bank for a loan. Lending Club was trading at $5.06 back in June when that article came out and has risen to over $6.50 since then, although it has pulled back somewhat now.

United Kingdom

Zopa and Funding Circle awarded Superbrand status (P2P Finance News), Rated: AAA

ZOPA and Funding Circle have been named as some of the top household names in the UK on the annual Superbrands list for 2017.

Compiled by the Centre for Brand Analysis, the Superbrands list is split into business and consumer categories with more than 1,500 companies scored on their quality, reliability and distinction.

The business list is judged by marketing experts and entrepreneurs, while the public decide on the consumer section.

Seven firms were named on the business superbrands list within a joint peer-to-peer and crowdfunding category, which was topped by Kickstarter.

P2P lender Wellesley also made the list, alongside crowdfunding platforms Seedrs, Crowdcube and Crowdfunder.

Zopa mulls move into secured lending (P2P Finance News), Rated: AAA

ZOPA is looking to expand into the secured auto finance space, where it sees an opportunity to grow its borrower base.

The peer-to-peer lending platform, which usually specialises in unsecured consumer loans, said it sees strong potential in the secured car finance sector as there are healthy levels of demand but typically a poor customer experience.

Tapping into that unmet demand from secured borrowers could help Zopa match an influx of money from yield-hungry investors.

European Union

Lendix Review – First Repayment (P2P Banking), Rated: AAA

Lendix is a p2p lending marketplace offering loans to SMEs in France and Spain (read earlier articles on Lendix). It is one of the larger players in continental Europe.

While the minimum bid on loans is just 20 EUR, the minimum amount for deposits and withdrawals is 100 EUR. Investors can deposit either via bank transfer or via credit card (limited amount). Depositing via credit card is a nice feature which is rarely offered by p2p lending services. I like it because I can react within a minute to new loan announcement emails.

Lendix loans carry interest rates from 4 to 9.9% and are for loan terms between 3 and 84 months.

So far Lendix has done a very good job in vetting borrower applications. The default rate to date is low – only 0.11%. However the marketplace is young and growing and I expect the default rate to rise with time.

Right now I have invested 640 EUR in 8 Lendix loans. I would have invested more, but I found the dealflow to be rather sparse in January and February. My average interest rate is 5.9%. This month I received my first repayment rate. Experiences of more seasoned investors report that repayments are usually on-time.

Global Peer2peer Insurance Market Report: Profiles of Every Known Peer-to-Peer Platform (GlobeNewswire), Rated: A

Research and Markets has announced the addition of the “Peer2peer Insurance” report to their offering.

The insurance ecosystem is undergoing transformation and innovation like never before, and what we have seen is only the beginning. From distribution to pricing, product development to underwriting claims servicing to compliance – no part of the insurance value chain is safe from change.

Insurance companies will need to work hard to transform their core operations to become agile and low cost and customer centric. Some will meet a Blockbuster/Kodak type fate by failing to transform properly. Those that succeed in their transformation will have both scale and agility and will thrive. FinTech is a spectrum of technology innovations and start -ups that demonstrate disruptive potential in applications, processes, products, or business models in the financial industry.

The sharing economy is developing peer-to-peer insurance. Peer to peer lending was laughed at by bankers- now they scramble to offer loans and buy loan books. Will insurers and brokers regret ignoring peer-to-peer insurance? Some platforms are built to work with insurers and re-insurers, but others have built them out of the mix. There are over 40 platforms globally and others on the way. Lemonade has just launched in New York to be the first peer to peer insurer in the USA.

Peer to peer insurance is a new form of technology driven by a social insurance model. Some platforms are well thought out, others are by techie dreamers with no understanding of regulation, law or insurance.

Australia

Business lender launches Australian broker push (Australian Broker), Rated: AAA

Small business lender OnDeck has announced the launch of a new broker product and will be in discussion with local brokers over the next couple of months.

“We realise that over 70% of small businesses in Australia like to access capital through an intermediary like a broker so this is very important for us.”

India

How start-ups are revolutionising money (Daily News & Analysis), Rated: B

FlexiLoans, a technology-based online financing platform, solves the funding problems of SMEs and help them in accessing quick, flexible and adequate funds for growing their businesses.

Another firm, vPhrase, is an artificial intelligence-based data analytics platform that helps businesses make their reports easier to comprehend. vPhrase’s patent-pending platform, Phrazor, analyses data, derives insights and then communicates those insights, in multiple languages.

FinMitra, a goal-based financial advisory and management services firm, helps individuals set financial goals, discover their risk profiles, and find the best investment portfolios in terms of mutual funds and fixed deposits.

Another start-up, S2Pay, enables corporations and financial institutes to leverage technology to create seamless payment processes, enhancing value-chain economics and providing superior end-consumer experience.

Authors:

George Popescu
Allen Taylor